Citi Downgrades Delek Logistics Partners, LP (DKL) to Sell

Citi analyst Douglas Irwin downgraded Delek Logistics Partners, LP (NYSE: DKL) from Neutral to Sell with a price target of $47.00.

The analyst comments "We are downgrading DKL to Sell (from Neutral) following recent outperformance. DKL has appreciated >30% from recent lows and is now the second best performer YTD across our midstream coverage. At 10.1x 2024 EV/EBITDA, DKL trades at a >2.0x premium to its closest peer and boasts one of the highest multiples within our coverage. We don't believe a premium multiple is warranted for several reasons. First, DKL has above-average leverage of >4.0x and a bottom-quartile FCF yield of <10%. Second, we see moderating growth moving forward. Peer-leading 2023 EBITDA growth of >25% is largely driven by M&A. We see this growth moderating to ~3% in 2024, making it difficult for DKL to grow into a premium forward multiple. Looking forward, we expect a reversion to the mean and maintain our $47 Target Price, which implies a ~9.1x FY24 multiple that is more in line with peer averages."

For an analyst ratings summary and ratings history on Delek Logistics Partners, LP click here. For more ratings news on Delek Logistics Partners, LP click here.

Shares of Delek Logistics Partners, LP closed at $55.97 yesterday.

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